Gold prices have defied the scaling back of rate cut expectations in the US.
The precious metal shrugged off hotter-than-expected US inflation data and focused on the softer labor market report as it rose nearly 1% on Friday.
The US CPI index showed a rise of 2.4% annually in September compared with 2.5% in August.
However, the reading was higher than the 2.3% expected by economists.
The CPI index, excluding food and energy, rose 3.3% annually last month, compared with 3.2% in August, and also beat forecasts of 3.2% by economists.
The hotter inflation data in the US furthered the notion that the Federal Reserve is likely to cut interest rates by a much smaller percentage in its upcoming meetings.
Gold rises on jobless claims data
On Thursday, data showed that jobless claims in the US rose to 258,000 in the week ending Tuesday from 225,000 in the previous week.
The report also beat analysts’ expectations of 230,000.
Gold prices have been supported by a weaker labor market in the US as the Fed assesses the labor market to make decisions on interest rates.
Traders were seen pricing in an 81% chance for a 25 basis point cut rate in November, CME Fedwatch showed.
Carsten Fritsch, commodity analyst at Commerzbank AG, said in a report:
The price strength is surprising given that expectations of interest rate cuts in the US have been scaled back noticeably since the surprisingly strong US labour market data a week ago.
Meanwhile, Federal Reserve Bank of San Francisco President Mary Daly said on Wednesday that she expects one or two more interest rate cuts by the Fed before the end of the year.
She further said that the labor market was more concerning than accelerating inflation in the US.
At the time of writing, the December gold contract on COMEX was 0.9% higher at $2,662.90 per ounce.
Silver and Palladium prices rise
Futures contracts on silver on COMEX and palladium on the New York Mercantile Exchange also rose as the dollar fell sharply against major currencies.
A weaker dollar makes commodities priced in the greenback cheaper for holders of other currencies, thereby lifting demand.
Silver, which is also an industrial metal, rose as China’s finance ministry is set to hold a press conference on Saturday to outline further economic stimulus.
China is one of the top consumers of precious metals and base metals in the world. More support for its economy is likely to prop up demand for commodities.
At the time of writing, the most active December silver contract on COMEX was at $31.435 per ounce, up 0.6% from the previous close.
Palladium prices on NYMEX were at $1,081.28 per ounce, up 0.9% from the previous close. Prices have risen in the last two sessions as the market tries to break out from the lows seen in August.
However, experts believe further upside in prices will be limited as demand for the metal is likely to remain muted due to the penetration of battery electric vehicles.
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